2019 (9) TMI 1366 - AT - Service Tax

Benefit of abatement in terms of N/N. 1/2006-ST dated March 01 2006 - reversal of cenvat credit with interest attributable to inputs/input services - whether amounts to non-availment of credit or not - whether subsequent reversal of credit makes BHEL ineligible to benefit under the said Notification? HELD THAT - In the case of COMNR. OF CENTRAL EXCISE CUSTOMS VERSUS M/S. PRECOT MERIDIAN LTD. 2015 (11) TMI 323 - SUPREME COURT the benefit of exemption Notification No. 5/99-CE dated February 28 1999 was available to the assessee therein subject to certain conditions being satisfied one of which was that the assessee had not taken any modvat credit under Rule 57A or Rule 57B or Rule 57Q of the erstwhile Central Excise Rules 1944 in the process of dyeing printing bleaching or mercerising in the manufacture of dyed printed bleached or mercerised yarn. The assessee had utilised the modvat credit in the previous two years prior to February 28 1999 and while not availing or utilising any modvat credit after the issuance of the Notification the assessee returned or paid back in January 2005 even the earlier modvat credit it had taken and utilised - This decision fully covers the instant case and on respectful application thereof it is conclusive that the impugned order of the Commissioner is legal valid and proper and that the instant appeal of the Revenue is without any merit or substance. The other contention of the Revenue that BHEL could not furnish relevant records and particulars is also incorrect. The impugned order of the Commissioner and the findings contained therein clearly shows that the relevant records and particulars were before the Commissioner which is perused and scrutinised to arrive at findings against each project as stated in the show cause notice. No material has also been disclosed by the Revenue in support of this contention. As such this contention is unsustainable. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Whether subsequent reversal of credit makes the appellant ineligible to benefit under the said Notification?
- Whether the appellant could furnish relevant records and particulars to confirm non-utilization of credits for providing services for which they availed benefit of the said Notification?

Analysis:

Issue 1: Whether subsequent reversal of credit makes the appellant ineligible to benefit under the said Notification?

The appellant, a public sector undertaking, was engaged in setting up power plants and had availed abatement under Notification No. 1/2006-ST for Industrial Construction Services (ICS). The show cause notice alleged wrongful availment of cenvat credit by the appellant, leading to a demand of service tax. The Revenue contended that once credit is availed, abatement is not available, even if subsequently reversed. The Revenue relied on the Supreme Court's decision in Commissioner of Customs Vs. Dilip Kumar & Company. However, the appellant argued that subsequent reversal of credit legitimized the credit availed. The Commissioner analyzed each case and concluded that the appellant satisfied the requirements of the Notification. The Tribunal cited cases supporting the appellant's position, emphasizing that reversal of credit amounted to non-availment of credit, thus upholding the Commissioner's decision.

Issue 2: Whether the appellant could furnish relevant records and particulars to confirm non-utilization of credits for providing services for which they availed benefit of the said Notification?

The Revenue contended that the appellant failed to provide records confirming non-utilization of credits for services availed under the Notification. However, the Tribunal found that the Commissioner had access to all relevant records and particulars during adjudication. The Tribunal held that the Revenue's contention lacked supporting material and was unsustainable. The Tribunal upheld the Commissioner's decision, emphasizing that the appellant had duly discharged the burden of proof for entitlement to the abatement under the Notification. The Tribunal rejected the Revenue's appeal, affirming the legality and validity of the Commissioner's order.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner's order. The Tribunal found that the subsequent reversal of credit did not render the appellant ineligible for the benefit under the Notification. Additionally, the Tribunal determined that the appellant had provided necessary records and particulars to support their entitlement to the abatement. The decision highlighted the importance of thorough analysis and documentation in tax disputes to establish compliance with exemption notifications.